Define: Down Payment

UK Accounting Glossary

Definition: Down Payment



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Full Definition of Down Payment


A down payment is the amount paid in advance of delivery of the purchased good or service, usually to demonstrate good faith. A down payment can be associated with any kind of purchase. In real estate, the term down payment takes on a slightly different meaning. The good faith down payment in the usual sense is instead called earnest money, a contract deposit, or something similar, with the term down payment referring instead to the amount contributed at closing by the financing buyer. The size of a down payment on real property is a good measure of the risk of default for the lender. The larger the down payment, the less likely the borrower is to default on a mortgage given the size of the loss the buyer would incur. The minimum down payment is thus an important characteristic of most mortgage products.


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Down Payment. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. March 30, 2020 https://payrollheaven.com/define/down-payment/.
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Down Payment. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/down-payment/ (accessed: March 30, 2020).
American Psychological Association (APA):
Down Payment. PayrollHeaven.com. Retrieved March 30, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/down-payment/

Definition Sources


Definitions for Down Payment are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February 2020.